JUSTICE RICE delivered the Opinion of the Court.
JUSTICE MÁRQUEZ does not participate.
Mark Anderson ("Anderson") challenges an April 3, 2009, water court order that granted attorney fees and costs to Henry R. Sebesta and Mary M. Sebesta Revocable Trust and C&K Properties, Inc. (collectively "Sebesta"), and Richard Pursell ("Pursell") for various stages of the litigation. We hold that the water court was correct in granting attorney fees and costs associated with the Final Decree to Pursell because he was the "prevailing party" under the parties' Water Agreement. Further, the water court was correct in both the award and the amount of attorney fees and costs to both Sebesta and Pursell for defending Anderson's Motion to Enforce because it lacked substantial justification under section 13-17-102(4), C.R.S. (2010). But, we hold that the water court incorrectly awarded attorney fees and costs to Sebesta and Pursell for defending Anderson's appeal and pursuing the underlying fee award. Therefore, we affirm in part and reverse in part.
At this stage, this case involves a dispute over attorney fees. This attorney fee dispute arises from an ongoing clash over the Eureka Ditch water right, the procedural history of which is necessary to understand the attorney fee dispute now at issue.
The Eureka Ditch flows in turn through the properties of Sebesta, Diana and Wail Hashimi ("Hashimi"),
On September 12, 2000, Sebesta and Anderson entered into a Joint Water Use and Maintenance Agreement ("Water Agreement").
Anderson submitted an application to the division engineer seeking to, among other things, adjudicate absolute water rights, change his portion of the Eureka Ditch water right to allow for pond storage and other uses, and provide a plan for augmentation to replace out of priority depletions. Sebesta and Pursell both opposed the application because they were concerned that if the water court approved the application, their shares of the water right would be harmed.
Before the water court ruled on Anderson's application, Anderson moved for injunctive relief against Sebesta and Pursell claiming that he was not receiving his share of the water from the Eureka Ditch. Anderson argued that the reason for his shortfall was that Sebesta and Pursell had both added new ponds and expanded existing ones on their land, causing more water to sit in the ponds and less water to be delivered to Anderson. Sebesta responded to this motion but Pursell did not.
The water court granted the injunction in November 2003, and ordered Sebesta and Pursell to cease diverting and storing the water and to affirmatively deliver one-half of the flow of the Eureka Ditch to Anderson. In so doing, the water court ordered Sebesta and Pursell to by-pass their ponds to ensure that Anderson would receive his share. The water court also awarded attorney fees to Anderson for the injunction.
Sebesta filed a timely Motion to Alter, Amend or Vacate the injunction. Pursell also filed a Motion to Alter, Amend or Vacate, but did so after the fifteen-day deadline. Before the water court ruled on either of the motions, Anderson and Sebesta entered into a stipulation in April, 2004. In the stipulation, Anderson agreed to dismiss the water court's injunction order against Sebesta. In exchange, Sebesta dismissed his opposition to Anderson's application. Sebesta and Anderson also agreed to reasonably accommodate each other's ownership interests in times of low flow and to cooperate in constructing and installing additional structures to facilitate the delivery of Anderson's 50% interest. The stipulation did not require Sebesta to by-pass the ponds on his land. The water court accepted the stipulation.
Neither the injunction nor the stipulation affected Anderson's pending application.
The water court ultimately held a trial on Anderson's application in November 2004, and issued a decree on the matter ("Final Decree") on February 10, 2005. The Final Decree incorporated the Water Agreement and granted Anderson much of what he requested in his application. The water court ruled, however, that Anderson's share of the water right was only in the main channel of the Eureka Ditch, that he was to bear transit losses, and that Pursell and Sebesta were not required to by-pass the ponds on their land.
Anderson submitted a timely motion for costs under C.R.C.P. 54(d). Pursell, on the other hand, submitted a motion for costs and attorney fees, alleging that he was the "prevailing party" under the Water Agreement, but did so on November 2, 2005, over eight months after the fifteen-day deadline. The water court denied both motions on December 26, 2006 — Pursell's because it was late and Anderson's because he was not the prevailing party. With regard to Anderson not being the prevailing party, the water court stated that "[w]hile Anderson obtained some of the relief he requested, a substantial portion of the trial surrounded the interpretation of certain aspects of the [Water Agreement] which were determined contrary to Anderson's position."
Pursell made a timely motion for reconsideration of this order.
In October 2006, because he was again not receiving his share of the water right, Anderson filed a Motion to Enforce seeking to compel Pursell to comply with the injunction order and Sebesta to comply with the stipulation. Anderson also asked the water court to modify the stipulation to require Sebesta to by-pass the ponds on his land.
The water court denied this motion in an order dated December 18, 2006. It ruled that the Final Decree took precedence over the injunction order and that Sebesta and Pursell were not the reasons that Anderson was not receiving his water. Ultimately, it held that Anderson's motion was "without merit and constitute[d] a substantially frivolous claim" and awarded attorney fees to Sebesta and Pursell.
Anderson filed a notice of appeal with this Court. But, after obtaining multiple extensions of time to file his opening brief, Anderson moved to dismiss the appeal. We dismissed the appeal with prejudice and remanded to the water court without any directions concerning attorney fees.
After we remanded to the water court, the water court held a hearing on attorney fees associated with the Motion to Enforce. The water court made its ruling in an order dated April 3, 2009, and granted costs and attorney fees to Sebesta and Pursell. In addition to fees and costs associated with the Motion to Enforce, it granted Pursell's motion for reconsideration that he filed after being denied costs and attorney fees associated with the Final Decree. Further, the water court granted Sebesta and Pursell the costs and attorney fees that they incurred as a result of Anderson's abandoned appeal of the Motion to Enforce and in defense of Sebesta's and Pursell's motions for costs and fees.
In total, the water court awarded $51,635 in attorney fees and $833.82 in costs to Pursell and $22,493 in attorney fees and $2,300.50 in costs to Sebesta.
While this appeal has been pending, the water court has made findings involving the same parties and issues. First, in September 2009, in a case brought against Pursell by the State Engineer, the water court ordered Pursell to release all water from the ponds on his property along the Eureka Ditch until he obtained a storage right. Second, in November 2009, the water court entered an order confirming that Anderson complied with the terms of the Final Decree.
Anderson now appeals the April 3, 2009 order of the water court granting Sebesta and Pursell costs and attorney fees for the Motion to Enforce and the appeal, and granting Pursell costs and attorney fees for all stages of the litigation.
When the water court granted attorney fees to Sebesta and Pursell for the Motion to Enforce, it also granted Pursell's motion to reconsider its denial of costs and fees from the Final Decree. Anderson argues that the water court abused its discretion in granting Pursell's motion for reconsideration and awarding Pursell costs and attorney fees for all previous stages of the litigation. He argues that because Pursell originally filed his motion for costs and fees after the fifteen-day time limit set forth in C.R.C.P. 121, section 1-22, the water court could not grant the motion. Further, he asserts that Pursell was not a prevailing party in a dispute under the Water Agreement, and thus, that costs and attorney fees were not proper. We disagree.
We review the decision to award costs and attorney fees under an abuse of discretion standard.
The injunction, Final Decree, and all related motions were a result of a dispute under the Water Agreement. The Water Agreement states that "[i]n the event of a dispute
Although Anderson's original application did not specifically involve the Water Agreement, nearly every other motion and order in this case referenced and incorporated the Water Agreement. Even Anderson agrees that his motion for an injunction was made in part to enforce and interpret the Water Agreement. The Final Decree also interpreted and incorporated the Water Agreement. In the Final Decree, the water court clarified what it meant to require one-half of the water to remain in the main part of the Eureka Ditch. Therefore, we conclude that this was "a dispute concerning the intent or construction of [the Water Agreement]."
We further conclude that Pursell was the "prevailing party" under this provision. Like the decision to award attorney fees, we review determinations of which party is the "prevailing party" under a fee shifting provision for an abuse of discretion.
In order to be a "prevailing party," a party must succeed on a significant issue in the litigation and achieve some of the benefits sought.
In
Here, the bulk of the litigation involved whether or not Sebesta and Pursell were required to by-pass the ponds on their properties so that Anderson would receive his share of the water right in accordance with the Water Agreement. There was little to no contention over the other parts of the application. The water court ultimately ruled that the Water Agreement did not require Sebesta and Pursell to by-pass the ponds on their properties. Thus, because Pursell succeeded on his main objection to the application and the only issue that was significantly litigated, the water court was correct in determining that he was the "prevailing party" in a "dispute arising concerning the intent or construction of the [Water Agreement]."
Anderson argues that, even if Pursell was the "prevailing party" under the Water Agreement, the water court erred in awarding costs and attorney fees to Pursell for two reasons: first, because he was late in filing the motion and second, because the motion should have been denied as a matter of law because the water court did not rule on the motion within sixty days in accordance with C.R.C.P. 59(j). C.R.C.P. 121, section 1-22 states that a party claiming costs and attorney fees shall make a motion for such "within 15 days of the entry of order or judgment or within such greater time as the court may allow." A trial court, however, is not required to deny a motion for costs and attorney fees if it is filed outside of the fifteen-day time limit, even if the submitting party does not request an extension of time.
Thus, the water court did not abuse its discretion in granting Pursell's motion for reconsideration, despite the original motion for costs and attorney fees being filed outside of the fifteen-day deadline, and properly granted Pursell costs and attorney fees related to the Final Decree.
Section 13-17-102(4) states that a "court shall assess attorney fees if, upon the motion of any party or the court itself, it finds that an attorney or party brought or defended an action, or any part thereof, that lacked substantial justification." An action lacks substantial justification when it is "substantially frivolous, substantially groundless, or substantially vexatious."
In his briefs, Anderson attempts to persuade us that the injunction was still valid and enforceable against both Pursell and Sebesta. With regard to Sebesta, the Stipulation Agreement clearly dismissed the injunction. Thus, there was no way that Anderson could enforce it against Sebesta.
Against Pursell, the result is the same because the Final Decree takes precedence over the injunction. A preliminary injunction is a remedy that is designed to preserve the status quo and "protect a plaintiff from sustaining irreparable injury and to preserve the power of the district court to render a meaningful decision following a trial on the merits."
In
Anderson attempts to justify his Motion to Enforce with two subsequent water court decisions. The first is a an order from a separate case,
Those orders, however, were not and are not at issue in relation to the determination of whether Anderson's Motion to Enforce was substantially frivolous. The order requiring Pursell to drain his ponds and cease storing and diverting water involved general principles of water law, not the Water Agreement, which was at issue in the injunction and Motion to Enforce. It was a result of the State, not Anderson, filing a complaint against Pursell. Therefore, that order is not applicable as justification for the validity of the Motion to Enforce.
The order confirming that Anderson complied with the Final Decree is also inapplicable. The Motion to Enforce did not pertain to the Final Decree; it was attempting to enforce the injunction. Anderson's adherence to certain requirements in the decree has no bearing on whether or not the Motion to Enforce lacked substantial justification. Therefore, Anderson's argument that the subsequent orders showed that his Motion to Enforce did not lack substantial justification is unfounded.
Anderson argues that, even if the water court correctly awarded attorney fees and costs to Sebesta and Pursell, it erred in determining the amount. He argues that the water court erred because it did not provide a detailed description of the factors in section 13-17-103, C.R.S. (2010) and that the amount that they awarded was not appropriate.
Section 13-17-103 mandates that, in determining the amount of an attorney fee award, the court shall specifically set forth the reasons for the award and the amount of the award and, in so doing, shall consider specific enumerated factors. Although the trial court may not make conclusory statements that a claim lacks substantial justification, it is only required to discuss the relevant factors of section 13-17-103.
Here, the water court did not make a bald assertion as to why Anderson's Motion to Enforce was substantially frivolous. Instead, it discussed why the Final Decree controlled over the injunction. This statement that the injunction was no longer valid was sufficient for a finding that the Motion to Enforce it was without merit.
With regard to calculating the dollar amount, the water court also acted correctly. To calculate a reasonable fee, a trial court shall start by multiplying the number of hours reasonably expended on the matter by a reasonable hourly rate.
Anderson argues that the relevant community was Pueblo, Colorado, not Denver, Colorado, and that the rate for one of Sebesta's attorneys should be discounted accordingly. He relies in part on
Anderson argues that the water court erred in granting Sebesta and Pursell the attorney fees and costs that they incurred in defending his abandoned appeal of the denial of the Motion to Enforce. C.A.R. 38(d), the only rule directly applicable to attorney fees on appeal, states that "[i]f the appellate court shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee." C.A.R. 39.5 provides the procedure for this and states that "[i]f attorney fees are otherwise recoverable for the particular appeal, the party claiming attorney fees shall specifically request them, and state the legal bases therefore, in the party's principal brief in the appellate court." In this case, however, Anderson never filed a brief and instead decided to abandon the appeal, dismissing it with prejudice.
Sebesta and Pursell argue that, based on numerous prior cases, when a party has properly been awarded attorney fees prior to an appeal, it should also be awarded attorney fees for defending the appeal.
We need not opine as to which method we believe is correct or whether Anderson's abandoned appeal was or was not frivolous. Despite obtaining multiple extensions of time, Anderson never filed an opening brief. Rather, he asked us to dismiss his appeal with prejudice. Without a brief or arguments, there is no way for us to determine if the appeal was or was not frivolous. Similarly, there is no reason why Sebesta and Pursell should have incurred any attorney fees in defending Anderson's abandoned appeal because Anderson did just that, abandoned it, before filing an opening brief. Accordingly, we hold that Sebesta and Pursell are not entitled to attorney fees associated with Anderson's abandoned appeal.
Lastly, Anderson argues that the water court erred in granting Sebesta and Pursell costs and attorney fees for resolving the fee and cost issue stemming from the Motion to Enforce. Costs and attorney fees are only appropriate in a motion for attorney fees under section 13-17-102 if the trial court finds that the defense to the motion lacked substantial justification.
Sebesta and Pursell argue that if a party succeeds on its underlying claim for attorney fees, it should get costs and attorney fees associated with pursuing that award. The cases that they cite for this proposition, however, do not deal with the specific situation that we are faced with here under section 13-17-102.
Sebesta and Pursell assert that portions of Anderson's challenge to their motion for attorney fees were frivolous because he continued to challenge the water court's denial of the Motion to Enforce. That denial, however, was the underlying reason for the fee issue and references to it were relevant and, therefore, not frivolous.
Therefore, Sebesta and Pursell are not entitled to the costs and attorney fees that they incurred in pursuit of the fee and costs issue related to the Motion to Enforce.
Sebesta and Pursell also ask for the attorney fees that they have incurred in defending this appeal. Because we find that Anderson's defenses to the successful portions of Sebesta and Pursell's motion were not frivolous, Sebesta and Pursell are not entitled to these attorney fees.
We hold that Pursell was entitled to costs and attorney fees associated with the application and Final Decree because he was the prevailing party under the Water Agreement. The water court did not abuse its discretion in allowing Pursell's motion for costs and attorney fees after the fifteen-day deadline. The water court was also correct in awarding costs and attorney fees to both Sebesta and Pursell for defending Anderson's Motion to Enforce because it lacked substantial justification under section 13-17-102(4). Lastly, the water court erred in granting attorney fees and costs to Sebesta and Pursell for their work associated with Anderson's abandoned appeal and the fee issue itself.